Move to tighten lending criteria condemned

Kathmandu, December 25

Bankers have expressed their reservations against the recent move of Nepal Rastra to tighten lending standards for auto and personal home loans.

Stating that the NRB’s move — which requires banks and financial institutions to maintain the debt service to gross ratio on personal loans, housing loans and hire purchase loans at 50 per cent — will directly hit and disbursement, bankers have asked the central bank to revoke its direction.

Issuing a circular yesterday, NRB had barred BFIs from floating personal, housing and hire-purchase loans amounting to more than half the income of the borrower. The circular has also made it mandatory for BFIs to seek income certificates and tax clearance certificates from the borrowers of such loans.

“As BFIs have their own on issuing loans, implementation of such provision will directly affect loan disbursement from BFIs,” said Bhuwan Dahal, of Sanima Bank, adding that bankers will discuss the issue with the central bank.

Read the full news article on The Himalayan Times.

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